Talk over the past couple of months has been focused on the fact that interest rates are rising and the Fed will raise rates very soon. A big test is in play before one can say the “rate trend has changed”.
Below looks at the yield on the 10-year note over the past 20 years.
The 10-year yield has remained inside of falling channel (1), creating lower highs and lower lows for the majority of the past 20 years. The top of the channel is being tested as resistance at (2), as momentum is reaching lofty levels.
The trend in rates remains down, with a key resistance test in play at (2). If rates breakout at (2), they would accomplish something they have not been able to do since the mid 1990s. So what happens here could well be at least a short-term game changer.
What happens at (2) should have a large impact on TLT, XLU and IYR going forward, as “EACH” is testing 6-year rising channel support right now, with momentum on each reaching oversold levels.